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Comment by KKKKkkkk1 | Hacker News Reader

As we now know, insiders have been selling Intel shares long before the vulnerabilities became public. The impact is already baked into the price, whatever it was. So we'll never know whether Krzanich made money at the expense of his shareholders, but I can't imagine he thought no one will ask themselves that question.

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> As we now know, insiders have been selling Intel stock long before the vulnerabilities became public.

I understand this is just not legal, but otherwise why should they had not (i.e. why exactly is it illegal)? What the rationally logical plan they should have taken? Telling everyone about the vulnerability is irrational - it should be told to those who are supposed to write patches first, keeping the shares when you know they are going down is irrational too.

Insider Trading is illegal. That’s what he’s being accused of here. He cannot trade on information that is material to the stock price before it is made public. A vulnerability of this magnitude is unquestionable material non-public information. If these trades were the result of his learning about the breach, this is a pretty easy case for the SEC. I really doubt that he executed these trades, as that would be the dumbest thing an executive has done in a while.

It's not an argument of rationality, it's about fairness to the larger market and how easily insiders can abuse access to information. The price of a stock is supposed to reflect its value, if you act on insider information and sell at the apparent price when it would actually be lower if everybody had access to the same information then it's fraud. Those are the rules you agree to and you have to abide by them, even if it appears irrational. I agree actually that patch writers should have been notified first with specifics, but he should have held on to the stock (if he indeed did sell it based on insider info as accused).

Edit: to say it differently, it's only irrational if you consider his personal profit exclusively and not the harm to the greater market and shareholders. As con artists and scammers demonstrate, fraud can be very profitable personally. I think the disadvantages are self-evident, however.

>keeping the shares when you know they are going down is irrational too.

Which is why we have insider trading laws: to make it rational again.

"I know this insider information that means my shares will be worthless tomorrow when everyone finds out. It's not rational to keep them."

"If you do that you'll go to prison."

Still irrational?

Is it rational to have laws that rationalize irrational artificially?

Yes of course. As this example demonstrates in fact: the rational behavior would be to do something that hurts everyone for the sake of an individual who has privledged information. The penalty makes the behaviour we need to encourage become the rational course.

I'd say a large portion of rules of society function this way for this reason.

Excellent point. If non-insider investors notice large suspicious insider trades, then they might want to sell based on that knoweldge.

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